Top 10 tips for FM firms new to Saudi Arabia
fmME speaks to FM experts in Saudi about the top 10 factors that will shape the kingdom's industry in the years to come
As Saudi Arabia looks to attract foreign investors and spur growth through Saudi Vision 2030, the results of such programmes will also shape the country's FM sector in the years to come.
Strategies such as the decentralisation of activities previously handled by the kingdom's public sector will boost the Saudi FM industry, and is also likely to attract fresh investments in the sector.
fmME talks to the kingdom's FM and asset management experts about the key tips to bear in mind while expanding into Saudi Arabia's FM sector.
1. The impact of oil prices
Richard Naylor, chief executive for DTZ’s Saudi operations, said the historic reliance on state spending has affected the kingdom’s FM market amid ongoing fluctuations in global oil prices.
“Historically speaking, the majority of new development within Saudi Arabia has been through government or semi-government funding, such as education, aviation, healthcare, and public infrastructure projects,” Naylor told fmME.
“With such a reliance on public sector funds, a significant level of impact on development has been seen through the reduction in oil prices, which has resulted in a number of new schemes being placed on hold and a delay in the number of high-profile projects being completed and handed over to FM operators.”
2. Public sector awareness
While Saudi’s private sector developers are ahead of their government counterparts in terms of FM and IFM service adoption, Naylor said this equation could change in the years to come.
“With the recent funding restrictions placed on government spending, even public sector organisations are being actively encouraged to embrace the private sector and to consider alternative approaches to funding, developing, and operating new and existing facilities.”
3. Long-term ambitions
Barry Clarke, general manager for Macro International’s Qatar and Saudi operations, said the kingdom’s privatisation plans will improve the prospects for facility and asset management (FAM) firms in the country.
“Property privatisation should [transform] long-term maintenance plans to focus on quality and value as opposed to cost,” he told fmME.
4. Privatisation of master developments
For FM operators, the scope to grow in Saudi will also expand as the country looks to privatise assets and developments that currently receive state spending.
The largest of these is likely to be the 160ha King Abdullah Financial District (KAFD), the ownership of which could be transferred to the Public Investment Fund from Public Pension Agency (PPA) as part of Prince Salman’s 2030 plans, according to Reuters.
5. Educate the industry
Ramzi Darwish, consultant for international corporate client services at Cluttons, said that master developments hold significant opportunities for FM companies in the kingdom, especially those that participate in activities to educate local clients about the benefits of FM services.
"Properties or assets owned by multiple investors will have a positive impact on FM business in Saudi," he added.
6. The value of perception
International property investors attracted to Saudi's privatised development market would likely come from a different background and with a different mentality, which they might use to influence other investors involved in the project, Darwish explained.
"This can change the [perception of] value added by appointing an FM company."
7. White land tax
Saudi's impending white land tax could lead to increased partnerships that foster the uptake of FM services.
“Following the announcement of the white land tax, we forecast that there will be a lot of partnerships between land owners to develop residential and commercial properties, so [projects] could increase significantly in the next few years," Darwish said.
"To maintain these properties, their developers – be they government or semi-government – might start considering the appointment of FM companies to look after the assets."
8. High-rise promise
Naylor said the uptake of IFM services is already growing within the kingdom’s high-rise sector.
“FM serves all market sectors, but it’s true to say there has been a slow uptake in applying FM to residential developments in Saudi Arabia. However, we are starting to see a move towards IFM for vertical communities, with several tower developers approaching us for a solution," he continued.
Contemporary FM standards in Saudi follow the region-wide trend that adopts international and localised best practices – a scenario that may sometimes lead to operational challenges.
“As a property services provider, the lack of standardisation in regulations can prove very frustrating, with client RFPs [request for proposals] sometimes requesting American standards, some quoting British standards, and others not requesting any set standards at all,” Naylor explained.
Cluttons' Darwish said education about the benefits of FM and its cost savings could lead to increased uptake of such services in the kingdom, leading to the creation of an enhanced set of standards and best practices.
10. Room for steady growth
Saudi's FM market seems to be going from being delivery-oriented to using performance measures, Macro's Clarke said.
"Saudisation should be on the agenda for FM companies by creating employment for nationals and making sure FM is seen as a career path,” he continued.
“The country’s National Transformation Plan aims to create more private sector jobs, and this will hopefully be beneficial for the FM sector. More women working will also have an impact on the quality agenda.
“All of these changes will undoubtedly support the need for technology applications to be deployed and utilised, which is another exciting opportunity,” he added.